Lady Business: Buttigieg, Warren, and who wants to be a millionaire?
Hello and welcome to Lady Business, a newsletter about women, the business world, and all the ways they overlap. You can sign up for Lady Business and read previous issues here. This is the 88th issue, published December 22, 2019.
Millionaire Math
“Millionaire” and “billionaire” are becoming increasingly politicized words, and states of being, in these days of proposed wealth taxes and multiple billionaire presidential candidates. But there’s a significant gap between the two types of wealth, as this Wired profile of Salesforce founder and billionaire Marc Benioff points out:
“A millionaire can, with some dedicated carelessness, lose those millions. Billionaires can be as profligate and eccentric as they wish. …Unless they’re engaging in fraud or making extremely large and risky investments, they’re simply no match for the mathematical and economic forces—the compounding of interest, the long-term imperatives of markets—that make money beget more money.”
So for most of us, becoming a billionaire is about as likely as marrying into the British royal family. But becoming a millionaire is widely seen as an attainable ambition, and financial goal, for most white-collar professionals. For example: During my five-plus years running Inc.’s Money section, I edited many (so many) personal finance columns about how to save enough money for retirement. One commonly-cited, if increasingly inadequate, rule of thumb: Over the course of your three or four decades in the workforce, try to save at least $1 million to live on after retirement.
Which is pretty attainable, if scarily little, these days. If you’re privileged enough to be born into an upper-middle-class family or to go into a job where you end up making a six-figure annual salary or close to it, you too can probably become a millionaire -- at least on paper. This sort of millionaire status doesn’t mean private jets or gold-plated toilets or whatever; for these kinds of millionaires, your wealth mostly has to do with the compound interest your retirement savings earn in the stock market. So for people at a certain level of income, who are making enough money that they can afford to invest some in index funds or other fairly conservative investments, becoming a millionaire is less a function of hard work or brilliance than it is of privilege, following basic investment advice, and time.
Which is why my personal-finance radar went up at the Democratic presidential debate this past week, when Pete Buttigieg proudly pointed out that, unlike Elizabeth Warren, he’s not a millionaire.
Dude. Pete. You’re 37. You’re more than three decades younger than Warren. (Which I know is another source of your appeal!) You have at least those three decades to earn as much as she has, and you know what? The evidence suggests that you’re well on track! You have an annual mayoral salary of almost $150,000 (not including your $75,000 book advance or any royalties), and investments of up to the same amount. You own up to $50,000 in Apple stock, and up to $15,000 in Google. For people with these sorts of investments in their mid-thirties, time and compound interest should take care of most of the rest. So the odds are good that by the time you’re Warren’s age, congratulations, you’re going to be a millionaire!
Actually, you’ll be one at least twice over, according to the rough calculations of NerdWallet’s retirement calculator. That calculator is admittedly very basic and doesn’t take into account student loan debt, of which Buttigieg and his husband have over $130,000. But after considering both his debts and his assets, Forbes still estimates that Buttigieg is worth about $100,000. Low for the Democratic field, pretty decent for his age!
The most sobering thing about this whole discussion is that, according to these rough calculations, becoming a mere millionaire won’t guarantee Buttigieg enough money to retire comfortably. NerdWallet projects that he would have roughly $2.34 million by the time he’s 67, but that he’d need almost twice that amount. Which is a pretty terrifying example for everyone in his income bracket who isn’t running for president.
Of course, running a campaign is pretty expensive. But no matter how successful or costly his is, Buttigieg spent most of 2019 raising his national profile -- and his future earning potential. That should bode well for his future financial health … if not, perhaps, for his self-descriptive campaign rhetoric.
Lady Bits
--For Fortune’s January issue and its “25 Ideas for 2020” package, I got to interview two accomplished and fascinating thinkers: Stanford professor and economist Christopher Tonetti, who has a radical proposal for how consumers can take back control of their data from the likes of Facebook and Google; and Sandy Speicher, the new CEO of famed design firm IDEO. The first woman to hold the top job in IDEO’s four decades, Speicher is thinking especially hard about how inclusive her firm is, internally as well as externally: “We have to understand the diversity of many people’s needs in order to change the system. That means working together. And it means asking who is at the table doing the designing—and how we can ensure that people contribute to what is being designed for them.”
--Sad news about the deaths of a couple of men I admired: Andre Daguin, the Gascon chef who I got to know a little by proxy through profiling his daughter, D’Artagnan co-founder Ariane Daguin; and actor Rene Auberjonois, who played one of my favorite characters in the best Star Trek series (and who was a generous and gracious speaker at some of the Trek conventions I attended as a teenager).
--I started to write a 2019 retrospective newsletter before the debate made me nerd out over retirement-planning math. So, possibly more reflection to come after the New Year, but for now I’ll just say: This has been an exciting, occasionally tumultuous, and extremely gratifying year for me, and I’m very grateful for your readership and support. We’ll be back in early January; in the meantime, happy holidays and happy new year from Lady Business!
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